Department of Communications Strategic Plan and Budget: briefing

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
10 June 2004
DEPARTMENT OF COMMUNICATIONS STRATEGIC PLAN AND BUDGET: BRIEFING

Chairperson: Ms N Ntwanambi

Documents:
Department presentation

SUMMARY
The Department of Communications presented its strategic plan and budget for 2004/05. Questions and answers followed, during which competition, proposed reductions in communications prices for businesses, the proposed restructuring of the Department and its impact on jobs, and gender and disability issues were emphasized. Concerns were also raised about the restructuring of state assets, availability of emergency phone numbers, and allocation of funds to community radio stations.

MINUTES
The delegation included the Deputy Minister, Mr Roy Padjachee, the Deputy Director-General, Mr Joe Mjwara and the Chief Director of Finance, Mr Omega Shelembe.

Introduction by Deputy Minister
The Deputy Minister began by noting that his Department differed from others in that it had no provincial representatives; consequently there was a need for close collaboration with the provinces.

He presented a political overview and noted that the presentation emerged from a retreat that had taken place over two and a half days. More generally, the Department received its mandate from the Lekgotla, relevant acts and the President's State of the Nation address, which was pointed to throughout the Department's presentation. Recognition was given especially to the "1^st" and "2^nd" economies of South Africa; the importance of creating a "social security net" in South Africa was emphasized. The importance of introducing an Second National Operator (SNO) was also emphasized.

Department presentation
Mr Mjwara covered the Department's role, vision, mission, and mandate, and spoke more specifically of the postal service, e-commerce, and the proposed Convergence Act. He also itemized the Department's "Key Performance Areas". He noted particularly the development of a policy unit and an Information Communications and Technology (ICT) competition framework.

Mr Shelembe then gave a budget breakdown and discussed the shareholder management unit, strategy, finance and risk management and medium term expenditure estimates. The Medium Term Expenditure Framework (MTEF) was compared with previous year's expenditure and broken down into the economic classifications of currents payments, transfers and subsidies and payments for capital assets. Details of transfer payments were given.

Discussion
The Chair asked about if there was any upcoming legislation the Committee should know about. She also asked about the 112 emergency number which existed only in the Western Cape and expressed concern about the absence of these services in other provinces. She went on to say people were experiencing problems with emergency numbers and asked what the government was doing about them.

The Departmental replied that the emergency service was still in its pilot phase. The pilot, which had been running for ten weeks, was quite successful. There would be roll-out, though there were budgetary constraints.

An MP from the North-West, Mr Z Kolweni, was concerned that restructuring of the Department would affect workers adversely. Would this restructuring conflict with the Department's goal of job creation? Also, were the transfer payments listed the only ones the Department paid? No challenges had been mentioned in the Department's presentation, though there must have been some and he asked what were they? Also, nothing practical had been mentioned regarding the proposed reduction of communication costs.

Regarding the impact of restructuring on the work-force, the Department said they were committed to the objective of job creation stated in the President's State of the Nation address, and demanded that public entities demonstrate their commitment to it.

The Department responded that there had been a number of challenges, including a variety of stakeholders, the retention of skilled workers in the public sector and the ability of fiscus to support a number of interventions. A bill had been passed whereby those operating outside of exempt areas should register with regulators; there had been a great deal of opposition to this, but a court ruling had favoured the Department.

Ms N Ndalane (ANC, Limpopo) asked about the Department's proposed evaluation of policies, noting that there was no timeframe given and it was not specified how evaluation would take place.

Mr Mjwara commented that what was presented was a finalization of strategic thinking and that another document would be presented to Parliament in which timeframes would be given. On 21 June the Minister would be presenting the Budget in Parliament. Once a more exact budget was presented, Bills could be discussed. One means of evaluating was benchmarking with other countries and companies. Mr Mjwara apologized that the full complement of the Department could not be present.

Ms Themba (ANC) asked what was being done about gender issues and whether there was a budget and personnel to deal with this.

The Department replied that it did have a gender unit, including a program which looked at the percentage of women's participation in programming. There was a need to create an external impact gender programme too. In answer to a further question, it was noted that the person heading gender issues was at strategic management level located in the Director General's office. There was a budget for gender issues, although a breakdown of numbers was not available at present. A document setting out expenditure on gender issues would be supplied, though.

Mr D Gamede (ANC, Kwazulu-Natal) asked if there was parallel attention to disabilities and if the Committee could have an organogram. He asked too about allocation and accessibility regarding ICTs and what informed the Department's allocation? He mentioned the closure of such places in rural areas and asked how the Department was going to contribute to the reduction of business costs of these ICT centres.

Mr Mjwara noted that a policy on disabilities had been devised the previous year, and that there was still one amendment to come. This policy ensured accessibility to those with disabilities and would come to Parliament.

Regarding nodal points and budget allocation, the issue had been approached through a number of ways and Independent Communications Authority of South Africa (ICASA) was involved. Other government departments too were involved with the delivery of nodal points, and there would be sixty before the end of the year. The Post Office would roll out citizen post offices; there would be an extension of services into public information terminals. There was a policy directive to Telkom to develop infrastructure in other areas. There was a policy where telephone density was poor, that USALs (Under Serviced Areas Licences) were given; the first four had been licensed this month and three more were to come. There would then be a meeting between the regulators and the Department. There was a plan to extend services. There was the Universal Service Agency fund which received taxes from industry. The USA would address these rural issues. There would be a rapid roll-out to rural areas, and if the money allocated seemed inadequate it would be reviewed.

Regarding State Owned Entities (SOEs) there was a deadline and the Minister would report in August. There were two aspects of regulations. Firstly, if a community wanted to set up a station, the government would supply the studio equipment. Secondly, that certain areas needed to be targeted regarding program production. These pertained to women, children, disabilities and crime. Community programs could be produced and aired in their language of choice. The ability of fiscus informed these allocations.

Regarding the reduction of business costs, the DoC's fight against prices was broad. It was alleged that parastatals contributed to inflation. The DoC reviewed the adjustment of prices that were above the inflation rate; a report was due in July. None of the DoC's sectors had been serious violators. Competition must also be looked at to reduce prices. It was also important to enhance the capacity of regulators and to give regulatory directives.

Mr Payadachie added that it was necessary to recall the Minister of Public Enterprise's speech: it was not the intention of government to dispose of assets. Recalling the President's speech, a primary focus was to harness resources to intensify investment in public infrastructure. There was a need to ensure the DoC's oversighting responsibilities improved.

Regarding the DoC's collaboration with the Departments of Public Service and Administration and Provinical and Local Government to ensure that modern ICTs were introduced in developing nodes, they must assist. They must ensure that 60 MCCPs were built by the end of the year. There should be at least one in each of the 284 municipal areas.

Mr K Sinclaire (NNP, Northern Cape) commented that in discussion with the Department of Trade and Industry the day before, it had been noted that a major obstacle to the success of SMMEs were running costs, including communications. Much of this had to do with the monopoly held by Telkom. Where did the Cabinet stand on this? He noted that he was from the Karoo and had a rural constituency. The government must put down a service delivery blueprint on what they intend to do in these areas. Telkom always said that they did not have the money to improve their service, yet they made huge profits.

Mr Payadachie noted that the concerns about how the people were shareholders in Telkom were appropriate. There was a contradiction in Telkom being state owned and making huge profits, while it provided an inadequate service and the government claimed to serve the people. This must be addressed squarely. The DoC wanted answers from the Board on how would profits be transformed. It was important for the DoC to have oversight here. The Board of Telkom would present itself the next day. Regarding what the DoC did to meet the needs of the under-serviced, Mr Padayachie mentioned the USALs (Under Serviced Areas Licences). Ten companies had been shortlisted and seven approved by the Minister. By the time of the budget speech the other three would be decided. ICASA must fast-track delivery. He noted too that the companies that had won tenders were SMMEs that complied with affirmative action, and that the Department had a budget of R50 million over three years to support them.

Mr Kolweni asked, regarding the Key Performance Areas, what the cluster consultation referred to was.

The Department replied that the Competition Commission was housed under Department of Trade and Industry, but the DoC had its own regulator. The DoC wanted to look at the views of the Competition Commission as they developed their own competition framework. "Cluster" referred to government clusters such as DTI and Treasury. The DoC would need to work with them as they ushered in their competition framework.

Mr Gamede asked about the restructuring and its relation to payments for critical assets, which had been increased from R25 million to R29 million. If the Department was giving some of its business to others, why was there an increase?

Mr Shelembe noted that "by and large" the capital assets were internal departmental assets, that is, not investments with parastatals and government agencies. Computers and such like were delivered through the MCCPs.

Mr C Van Rooyen (ANC, Free State) complimented the Department for being the only one to have presented to the Committee so far to have acknowledged the Batho Pele principles in its mission.

More generally regarding the reduction of prices, the Department said that policies would be set as would frameworks to allow for competition. A review of how prices would be maintained would be done before the end of the year. They were also in discussion with ICASA about price reductions. The reductions would be the government's responsibility, and the regulation of these that of ICASA.

The Chair thanked the delegation. The meeting was adjourned.